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Background:

Single family residence owned and rented since 1984 with the building fully depreciated.

A break in a toilet supply line resulted in water damage to a bathroom, carpeted hallway and more. Costs for water damage mitigation services were paid to a contractor directly by the insurance company. The bathroom had to be demolished and rebuilt and carpet/pad replaced in hallway and adjacent rooms. I have hired contractors for this work and insurance payments to me will cover costs directly related to the water damage including lost rent.

During this process a leak in the lead toilet sweep was discovered and could not be repaired resulting in a new plumbing stack, toilet flange and toilet (cracked and leaking), at a cost of $2300. No insurance coverage here, just part of the joy of owning an 88 year old house.

Figuring this was a good time to update, we replaced the rotting wood bathroom window with glass blocks, a new vanity and faucet, new tub/shower faucet and all carpeting (4 rooms and hall).

Questions:

1 Is filing Form 4684 Casualties and Thefts required in this case where the cost of restoration and insurance payments should net to zero?

2 Is insurance compensation for lost rents included on Sch E, Line 3 with normal rental income?

3 Can the cost of the new plumbing stack, toilet flange and toilet be included on Sch E Line 14, Repairs?

4 Can the replacement of the rotting window, in the tub/shower area, be included on Line 14, Repairs?

5 Carpet expenses above and beyond insurance coverage will be depreciated. Is the new vanity and faucet (~$150) included here as well?

George
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